Mixed-Income Housing ‘Especially Impactful’ in Areas of Concentrated Poverty
Freddie Mac, McLean Va., said mixed-income housing can decentralize poverty, especially in areas of concentrated poverty.
Mixed-income housing integrates affordable units and market-rate units in the same property with the goal of establishing a diverse community with economic resources to provide income mobility for all residents. Over time, the impact of mixed-income properties in areas of concentrated poverty can extend beyond the residents of these developments and improve the lives of others in the community by lifting economic and social conditions in the area, Freddie Mac reported.
“Mixed-income housing serves a critical role in decentralizing poverty, especially in areas of concentrated poverty,” said Freddie Mac Vice President of Multifamily Research and Modeling Steve Guggenmos. “The large pipeline of mixed-income properties, especially in Opportunity Zones, demonstrates the significant role these developments play in providing safe, affordable housing to people residing in areas of concentrated poverty across the country.”
Freddie Mac released a white paper, A Study of Mixed-Income Housing in Areas of Concentrated Poverty, as part of its Duty to Serve plan to increase opportunities in historically underserved markets.
The report defined mixed-income housing as properties in which at least 20 percent of units are affordable to families earning below 50 percent of area median income or at least 40 percent of units are affordable to families with incomes below 60 percent of AMI and at least one-fifth of units are unaffordable to families earning 80 percent of AMI.
“Since part of the purpose of mixed-income housing is broadening economic opportunity, this style of housing can be especially impactful if it’s placed in an ACP,” the report said.
Other key findings include:
–Just under one-third of mixed-income properties are located within areas of concentrated poverty, but more than 36 percent of mixed-income pipeline properties are in ACPs, indicating these areas may be ripe for more mixed-income investment.
–There are nearly 1,500 mixed-income properties located in ACPs as of September 2020. Mixed-income properties are slightly overrepresented in ACPs when compared with properties that are not mixed-income.
–The 763 mixed-income properties currently in the development pipeline in ACPs that will create nearly 190,000 new units. Freddie Mac attributed the high development activity compared with the existing stock to Opportunity Zone-related construction activity.
–California has by far the most mixed-income properties in the pipeline in ACPs, but the properties can be found in nearly all states. –Within ACPs, mixed-incomed properties, both completed and in the pipeline, tend to be in areas where the renter-rate, income and income inequality are comparatively high.
